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Trade Not Aid: Obama’s Africa Legacy

Research Director, Area Studies and International Law; Head, Africa Programme

A shift in policy towards trade promotion could be the defining characteristic of the Obama administration’s relationship with the continent.

President Obama has been engaged in African issues, visiting Africa twice during his second term of office. Photo by Getty Images.

The US-Africa Business Forum (USABF), which meets for the second time in New York on 21 September, provides a platform to deepen business and financial ties between the US and Africa, and is the culmination of efforts to diversify Washington’s focus away from humanitarian concerns and counterterrorism. Emphasizing the business opportunities that Africa offers could be Barack Obama’s key Africa legacy, equivalent to the African Growth and Opportunity Act (AGOA) for Bill Clinton and the President’s Emergency Program on AIDS Relief (PEPFAR) or the US Africa Command (AFRICOM) for George W Bush.

The USABF is co-hosted by US Secretary of Commerce Penny Pritzker and Michael Bloomberg. President Obama, President Jacob Zuma of South Africa and President Muhammadu Buhari of Nigeria are attending, and almost 50 African heads of state or government have been invited. Up to 100 US and African corporations will be participating, in addition to numerous global CEOs, and new announcements of both private sector investments and government initiatives will be made. The forum will focus on seven sectors important to African economies; finance, capital investment, infrastructure, power and energy, agriculture, consumer goods and information communication technology.

It is no coincidence that President Obama wanted a second USABF before he ends his presidency. The USABF was the most successful part of the 2014 US−Africa Leaders’ Summit in Washington DC – the largest gathering of African heads of state and government ever convened by an American president. It resulted in announcements of billions of dollars of investment in Africa, and US-Africa trade has subsequently grown significantly, albeit from a low base. During the second Obama administration new initiatives such as Power Africa, Trade Africa and the President’s Advisory Council on Doing Business in Africa have been launched. The Power Africa initiative has leveraged nearly $43 billion in commitments from over 120 public and private sector partners and the Trade Africa partnership (with an initial focus on the East African Community) and saw a 24 per cent increase in exports of goods from the EAC to the US in 2013−14. There has also been the Global Entrepreneurship Summit, which met in 2014 in Morocco and Kenya in 2015, and an increase in trade missions. And not only does the Corporate Council on Africa in Washington DC now promote African trade, but recently the US Chamber of Commerce has finally begun taking Africa more seriously.

The USABF comes a year after AGOA was renewed for another decade (to 2025), and is timed to follow the 2016 annual AGOA Forum in Washington DC. Although Africa remains a relatively small player in world trade, representing just 3.3 per cent of global exports, its share is growing. AGOA and defining the agreements that will succeed it are likely to be an important agenda item both for the USABF and for future US administrations, and will have implications across global trade negotiations. Frameworks like the Transatlantic Trade and Investment Partnership (TTIP) being negotiated between the EU and US will impact the US−Africa trade relationship, as do the reciprocal economic partnership agreements (EPAs) that the EU has struck with most African nations. As the EPAs give Europe advantages over the US, Washington may seek to shape TTIP negotiations so as not to cede long-term commercial advantage to European firms trading with Africa. This has implications too for a post-Brexit United Kingdom, as London is also considering its own trade relationships in Africa outside the EPAs.

The USABF is meeting at an opportune moment for both African states and American businesses. Many African leaders, confronted by slower growth rates, are once again reappraising their international partnerships. Diversification is the preferred strategy for many, and the US is clearly part of the calculation for most (although South Africa is increasingly hostile to the US and seems to be pulling in the opposite direction). At the same time, the longstanding pattern of US corporate investment being limited to extractives – and some broader engagement in South Africa − is changing. Major players in corporate America, such as Blackstone, General Electric and Johnson and Johnson are developing long-term investment strategies across the continent, complementing Exxon’s and Chevron’s many decades of engagement. Other companies are testing the waters, assessing whether investing in Africa is profitable and possible given tightening US and European regulatory regimes.

When Obama was elected as the first African-American US president, some thought that Africa would become a more important focus of overall US foreign policy. It was never a realistic prospect, given the range and importance of US global strategic interests. But President Obama has been engaged in African issues, visiting Africa twice during his second term of office − Senegal, South Africa and Tanzania in 2013 and Kenya and the African Union headquarters in Ethiopia in 2015. He may yet visit Nigeria before his presidency ends, and will meet President Buhari in New York. In addition to improving bilateral relations with Kenya and Nigeria, President Obama’s mediation efforts have helped transitions in recent years in Senegal, Côte d’Ivoire and Burkina Faso, although he clearly regrets how poorly prepared his NATO allies, Britain and France, were in their Libyan intervention, given the instability that followed.

And perhaps most importantly, Obama recognized that in addition to good governance and aid, Africa can only flourish if there is more trade and investment into the continent. Reorienting US−Africa policy towards trade, and putting in place practical initiatives, such as the USABF, to build relationships and encourage investment, will be the key Africa legacy of the Obama administration.